Businesses have voiced concerns over the cost of Chancellor George Osborne’s new living wage.

Millions of the country’s poorest paid people will see their wages increase after George Osborne announced a new £9-an-hour National Living Wage… but the move is expected to cost thousands of jobs as firms struggle to afford the changes.

Declaring “Britain deserves a pay rise” in last week’s Budget, the Chancellor said over-25s would benefit from the compulsory increase by 2020.

The living wage will give a pay rise to six million workers but is expected to cost 60,000 jobs, according to the Office for Budget Responsibility.

Katja Hall, deputy director general of the CBI business lobby group, said: “The chancellor is taking quite a gamble by introducing a living wage.

“We are going to see a living wage of £9 an hour by 2020. That means on average, it is going to be rising over 6 per cent a year at a time when inflation is close to zero. What happens if there is an economic shock?

“I think the risk to business is, it is going to have face some tough choices around what jobs to create – possibly even job losses in some case.”

The Association of Convenience Stores criticised plans for a mandatory living wage as a “reckless measure” that will have a significant negative impact on the sector.

Chief executive James Lowman said: “The introduction of a compulsory Living Wage will have a devastating impact on thousands of convenience stores.

“This will lead to retailers having to reduce staff hours, work more hours in their business and ultimately cancel their investment plans.

“To introduce this measure with no consultation undermines the independent Low Pay Commission and is a reckless way to impose a massive burden on small businesses.”

Mr Osborne said the new Living Wage would mean a direct pay rise for millions of people. But at the same time the Chancellor wielded the axe on family benefits, slashing the tax credits that cost the country £30bn a year.

He said the in-work benefits for those on low pay would only be paid for the first two children, but not on any further children.

He also scrapped housing benefits for 18-21 year olds, froze working age benefits for four years, and slashed the income threshold at which families can receive tax credits by almost half from £6,420 to £3,850.